Accordia Golf Trust - RHB Invest 2019-04-16: Ground Checks AGT’s Yield Accretive Green


Accordia Golf Trust - Ground Checks: AGT’s Yield Accretive Green

  • We visited five of Accordia Golf Trust (SGX:ADQU)’s golf courses in early April and came away positive. We note that the number of players and utilisation rates have improved, pointing to a positive 4Q18. See attached PDF report for photos from the field trip.
  • Management revealed it is keen to acquire more accretive golf courses via debt and equity as well as offload underperforming golf courses to fund for these accretive acquisitions.
  • The consensus dividend yield of FY19F stands at 7.1%, an improvement from FY18 despite a recovery in Accordia Golf Trust's share price.

Improving operating statistics point to potential improving yield.

  • From Jan-Mar 2019, the monthly number of players has increased by 18.4%, 12.6% and 8.7% y-o-y. At the same time, the monthly utilisation rates have increased by 4.3%, 3.3% and 4.6% y-o-y. These improving operating statistics all point to a positive 4Q18, as well as potentially better dividends for shareholders.
  • Management will also inject further capex to further improve the performance of its golf courses.

Looking to acquire accretive golf courses.

  • Orix Corp (8591 JP) announced in Nov 2018 that it has transferred its golf business to MBK Partners, the same owner of the sponsor of Accordia Golf Trust. This would make Accordia Golf Co Ltd the largest golf operator in Japan.
  • Management mentioned that it is keen to acquire yield accretive golf courses following the refinancing of its debt to just two lenders, namely Aozora Bank (8304 JP) and Orix Corp. It is also in the midst of exploring a few acquisition options and working on the ideal capital structure for these acquisitions.
  • Management highlighted that it is open to both equity and debt sources to fund for these acquisitions. In addition, it is looking at selling some of the underperforming golf courses, especially those that can be converted into solar farms, which would yield a better selling price and plans to use the proceeds to fund the acquisition of accretive golf courses.
  • Key risks include bad weather, natural disasters, and FX fluctuations.

Jarick Seet RHB Securities Research | Lee Cai Ling RHB Invest | https://www.rhbinvest.com.sg/ 2019-04-16
SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998 SAME 99998